* Fed likely to deliver hawkish cut-analyst
* Dollar holds near 7-week high vs yen
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates prices, adds new comment, FX table, changes byline,
dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Sept 18 (Reuters) - The dollar rose on Wednesday
and was trading near a seven-week high against the yen, ahead of
a Federal Reserve policy meeting where officials are widely
expected to cut interest rates by a quarter of a percentage
point.
Many investors, however, were pricing in less aggressive
action from the Fed going forward as inflationary pressures and
wage growth have been steady, even as pockets of the U.S.
economy, such as the service sector, have shown steady
improvement.
"The Fed is likely to deliver a hawkish cut, reflecting a
mix of positioning and expectations," said Mark McCormick,
global head of FX strategy, at TD Securities in New York. "The
Fed will leave room to do more...and the dots are unlikely to
offer a crystal clear path to steeper cuts down the road."
Fed officials' median projection on the number of rate moves
is commonly referred to as its "dot-plot."
In morning trading, the dollar edged up 0.1% to 108.18 yen,
just below a seven-week high of 108.37 yen tested overnight. The
dollar index, tracking the unit against a basket of other
currencies .DXY , rose 0.1% to 98.352.
With recent economic data proving to be strong -- a
Citigroup U.S. economic surprise index .CESIUS is holding at
its highest levels this year -- some market participants are
buying the dollar in case the Fed signals a more confident view.
"All in, we think the meeting outcome risks disappointing
market expectations, which are perhaps leaning towards a more
dovish outcome, resulting in a renewed bid for the dollar,"
Scotiabank strategists said.
The dollar has been driven more by trade tensions between
Washington and Beijing this year than by U.S. monetary policy,
analysts said. The dollar has gained nearly 1% against the yen
since the last rate cut in July.
A retreat in global oil prices also restored some calm to
markets. Oil prices fell in Asia, extending Tuesday's 6%
decline, after Saudi Arabia's energy minister said the kingdom
had tapped stockpiles to restore oil supplies to where they
stood before weekend attacks shut around 5% of global output.
The euro slipped 0.1% to $1.1056, still higher than the
$1.0927 reached last week, the lowest in more than two years.
After the Fed releases its policy decision, attention will
turn to the Bank of Japan's meeting ending on Thursday, to see
whether it eases policy, too.
Deepening negative rates will be an option if the BOJ eases,
although the central bank may accompany that with measures to
mitigate the pain on financial institutions, sources have told
Reuters. Currency bid prices at 9:33AM (1333 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1053 $1.1071 -0.16% -3.63% +1.1075 +1.1037
Dollar/Yen JPY= 108.1600 108.1200 +0.04% -1.90% +108.2700 +108.0900
Euro/Yen EURJPY= 119.57 119.69 -0.10% -5.27% +119.8100 +119.4200
Dollar/Swiss CHF= 0.9956 0.9930 +0.26% +1.45% +0.9962 +0.9927
Sterling/Dollar GBP= 1.2466 1.2500 -0.27% -2.28% +1.2510 +1.2440
Dollar/Canadian CAD= 1.3253 1.3241 +0.09% -2.82% +1.3271 +1.3240
Australian/Doll AUD= 0.6840 0.6864 -0.35% -2.97% +0.6869 +0.6830
Euro/Swiss EURCHF= 1.1008 1.0994 +0.13% -2.19% +1.1010 +1.0985
Euro/Sterling EURGBP= 0.8866 0.8855 +0.12% -1.31% +0.8880 +0.8852
NZ NZD= 0.6333 0.6356 -0.36% -5.72% +0.6362 +0.6330
Dollar/Dollar
Dollar/Norway NOK= 8.9353 8.9210 +0.16% +3.43% +8.9712 +8.9245
Euro/Norway EURNOK= 9.8778 9.8792 -0.01% -0.28% +9.9062 +9.8780
Dollar/Sweden SEK= 9.6961 9.6693 +0.10% +8.17% +9.7274 +9.6669
Euro/Sweden EURSEK= 10.7189 10.7078 +0.10% +4.43% +10.7431 +10.7040
Dollar positions https://tmsnrt.rs/302mqb3
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